Employee Tax Table/941 fix

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FRDillon
Posts: 2
Joined: Sat Jun 23, 2018 9:59 pm

Employee Tax Table/941 fix

Post by FRDillon »

941 QTR 1 is exaggerated/erroneous. An employee's tax table was not invoked (Use Tax Table) on setting up as new employee.
error was not caught until letter from IRS received noting we were short on our monthly 941 payments.
I have created a spreadsheet( I can send this via?) , and basically discovered the employee was paid without holding out Soc Sec nor Medicare. Only Fed WT was withheld. Employee has been overpaid by Medicare and Soc Sec amounts. How do I reconcile? I would want to effect some sort of reimbursement from Employee, either over time or? I would think I would need to submit an amended 941 report to the IRS.
Occurred from Q1 thru almost end of Q2(11 bi-weekly pay periods-monthly 941 payments). Would like to fix thru payroll module or journal entries?

NeilZ
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Location: Dexter NM
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Re: Employee Tax Table/941 fix

Post by NeilZ »

FRDillon wrote:941 QTR 1 is exaggerated/erroneous. An employee's tax table was not invoked (Use Tax Table) on setting up as new employee.
error was not caught until letter from IRS received noting we were short on our monthly 941 payments.
I have created a spreadsheet( I can send this via?) , and basically discovered the employee was paid without holding out Soc Sec nor Medicare. Only Fed WT was withheld. Employee has been overpaid by Medicare and Soc Sec amounts. How do I reconcile? I would want to effect some sort of reimbursement from Employee, either over time or? I would think I would need to submit an amended 941 report to the IRS.
Occurred from Q1 thru almost end of Q2(11 bi-weekly pay periods-monthly 941 payments). Would like to fix thru payroll module or journal entries?
In order for the W2 to be correct at end of year, you would need to do this in the payroll module.

1. Make sure that the employee has the proper EMPLOYEE FITW, Social Security and Medicare pay items, as well as the EMPLOYER S.S. & Medicare pay items. These should already be setup for other employees, you just need to make sure you have the Pay Items included via the "Maintain List of Employees" in Payroll.
2. Let the employee know that the Social Security & Medicare were not withheld, and that you will be withholding these funds the next paycheck.
3 In the Maintain Item Description function, create TWO new Tax Deduction Payroll Item Descriptions: one using the TAX TYPE of Medicare, the other of Social Security. Both should use the same Liability Account as the existing employee Social Security & Medicare Item Descriptions, along with the same AP Vendor ID. For the Description enter 'Social Security Adj", do the same with the Medicare item "Medicare Adj".
4 Create one new Employer Liability Payroll Item Descriptions, using the Tax Type of Medicare. As in 3, set it up using the same liability and expense accounts as the existing Medicare Employer Liability Item Description. Use a Description much the same as that in 3.
5. Head back to the Maintain list of Employees function, and add the three new Pay Items, but when you do do not select a Tax Table, use the default manual amount. You can either enter the amounts at that time (if you're deducting the full amount) or leave it blank, and you can enter the amounts when you run payroll.
6. Make sure each of the new pay items are CHECKED in the employee's list of pay items. When you have finished making the adjustment deductions, UNCHECK those items, but do NOT delete them from the list, as they are necessary for payroll history and the W2.

You need to make the adjustment either all at once, or over a few pay periods, however, you will need to take care of the underpayment with the IRS as soon as possible. Follow the directions that the IRS have given you in their letter for payment and filing of any amended forms.

Doing the method as described above will update the Payroll Module for the W2, and will properly show the additional adjustment amounts in the employees S.S. & Medicare boxes on the W2.
Neil Zampella

Using PC+ since 1999.

FRDillon
Posts: 2
Joined: Sat Jun 23, 2018 9:59 pm

Re: Employee Tax Table/941 fix

Post by FRDillon »

Thanks NeilZ-
I have a question as to why I would not have to create another EMPLOYER ADJUSTMENT item to reflect and enter the employer liability for FICA/SOCIAL SECURITY EMPLOYER dollar amount(s)? I would think I would need that one as well.
We have paid the reported IRS moneys due. I will be affecting these changes for 1 of three entries for this person Monday.
thanks

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Employee Tax Table/941 fix

Post by NeilZ »

FRDillon wrote:Thanks NeilZ-
I have a question as to why I would not have to create another EMPLOYER ADJUSTMENT item to reflect and enter the employer liability for FICA/SOCIAL SECURITY EMPLOYER dollar amount(s)? I would think I would need that one as well.
We have paid the reported IRS moneys due. I will be affecting these changes for 1 of three entries for this person Monday.
thanks
I was replying at 4:50 in the morning, and totally spaced that out. Yes that is also needed.
Neil Zampella

Using PC+ since 1999.

christybeth
Posts: 72
Joined: Tue Feb 09, 2016 12:35 pm
Location: Washington State
Contact:

Re: Employee Tax Table/941 fix

Post by christybeth »

NeilZ wrote:
FRDillon wrote:941 QTR 1 is exaggerated/erroneous. An employee's tax table was not invoked (Use Tax Table) on setting up as new employee.
error was not caught until letter from IRS received noting we were short on our monthly 941 payments.
I have created a spreadsheet( I can send this via?) , and basically discovered the employee was paid without holding out Soc Sec nor Medicare. Only Fed WT was withheld. Employee has been overpaid by Medicare and Soc Sec amounts. How do I reconcile? I would want to effect some sort of reimbursement from Employee, either over time or? I would think I would need to submit an amended 941 report to the IRS.
Occurred from Q1 thru almost end of Q2(11 bi-weekly pay periods-monthly 941 payments). Would like to fix thru payroll module or journal entries?
In order for the W2 to be correct at end of year, you would need to do this in the payroll module.

1. Make sure that the employee has the proper EMPLOYEE FITW, Social Security and Medicare pay items, as well as the EMPLOYER S.S. & Medicare pay items. These should already be setup for other employees, you just need to make sure you have the Pay Items included via the "Maintain List of Employees" in Payroll.
2. Let the employee know that the Social Security & Medicare were not withheld, and that you will be withholding these funds the next paycheck.
3 In the Maintain Item Description function, create TWO new Tax Deduction Payroll Item Descriptions: one using the TAX TYPE of Medicare, the other of Social Security. Both should use the same Liability Account as the existing employee Social Security & Medicare Item Descriptions, along with the same AP Vendor ID. For the Description enter 'Social Security Adj", do the same with the Medicare item "Medicare Adj".
4 Create one new Employer Liability Payroll Item Descriptions, using the Tax Type of Medicare. As in 3, set it up using the same liability and expense accounts as the existing Medicare Employer Liability Item Description. Use a Description much the same as that in 3.
5. Head back to the Maintain list of Employees function, and add the three new Pay Items, but when you do do not select a Tax Table, use the default manual amount. You can either enter the amounts at that time (if you're deducting the full amount) or leave it blank, and you can enter the amounts when you run payroll.
6. Make sure each of the new pay items are CHECKED in the employee's list of pay items. When you have finished making the adjustment deductions, UNCHECK those items, but do NOT delete them from the list, as they are necessary for payroll history and the W2.

You need to make the adjustment either all at once, or over a few pay periods, however, you will need to take care of the underpayment with the IRS as soon as possible. Follow the directions that the IRS have given you in their letter for payment and filing of any amended forms.

Doing the method as described above will update the Payroll Module for the W2, and will properly show the additional adjustment amounts in the employees S.S. & Medicare boxes on the W2.
I have a similar situation and wanted to piggy back on this with a question. I am working on my Quarterly 941 report and found that we were off $25.84 because we did not take out FICA from one employee. Oops! Unfortunately, there are 2 pay periods already in the 3rd quarter that will be affected as well. I will follow the info above in correcting in Payroll and I'll mail in the owed payment.

My question is, after I've made the payment and corrected things in payroll to reflect the FICA amounts not taken, will next months 941 Quarterly report still be off since I'll be making a correction in a 3rd quarter paycheck for 2nd quarter? Thanks in advance!

~Christy

NeilZ
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Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
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Re: Employee Tax Table/941 fix

Post by NeilZ »

christybeth wrote: I have a similar situation and wanted to piggy back on this with a question. I am working on my Quarterly 941 report and found that we were off $25.84 because we did not take out FICA from one employee. Oops! Unfortunately, there are 2 pay periods already in the 3rd quarter that will be affected as well. I will follow the info above in correcting in Payroll and I'll mail in the owed payment.

My question is, after I've made the payment and corrected things in payroll to reflect the FICA amounts not taken, will next months 941 Quarterly report still be off since I'll be making a correction in a 3rd quarter paycheck for 2nd quarter? Thanks in advance!

~Christy
Where are you showing the additional FICA withheld?
Neil Zampella

Using PC+ since 1999.

christybeth
Posts: 72
Joined: Tue Feb 09, 2016 12:35 pm
Location: Washington State
Contact:

Re: Employee Tax Table/941 fix

Post by christybeth »

NeilZ wrote:
christybeth wrote: I have a similar situation and wanted to piggy back on this with a question. I am working on my Quarterly 941 report and found that we were off $25.84 because we did not take out FICA from one employee. Oops! Unfortunately, there are 2 pay periods already in the 3rd quarter that will be affected as well. I will follow the info above in correcting in Payroll and I'll mail in the owed payment.

My question is, after I've made the payment and corrected things in payroll to reflect the FICA amounts not taken, will next months 941 Quarterly report still be off since I'll be making a correction in a 3rd quarter paycheck for 2nd quarter? Thanks in advance!

~Christy
Where are you showing the additional FICA withheld?
I'll make the payment to the Dept of Treasury and expense the same line number for FICA that matches the payroll code expense. Then set up the new payroll item like you referenced in #3 for the employee that has the error and manually adjust it to the amount we were off in the 2nd Quarter in one paycheck and the same the following payday to correct for 3rd Quarter. Will that work so that my next 941 Quarterly Report will be back balanced?

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Employee Tax Table/941 fix

Post by NeilZ »

christybeth wrote:
NeilZ wrote:
christybeth wrote: I have a similar situation and wanted to piggy back on this with a question. I am working on my Quarterly 941 report and found that we were off $25.84 because we did not take out FICA from one employee. Oops! Unfortunately, there are 2 pay periods already in the 3rd quarter that will be affected as well. I will follow the info above in correcting in Payroll and I'll mail in the owed payment.

My question is, after I've made the payment and corrected things in payroll to reflect the FICA amounts not taken, will next months 941 Quarterly report still be off since I'll be making a correction in a 3rd quarter paycheck for 2nd quarter? Thanks in advance!

~Christy
Where are you showing the additional FICA withheld?
I'll make the payment to the Dept of Treasury and expense the same line number for FICA that matches the payroll code expense. Then set up the new payroll item like you referenced in #3 for the employee that has the error and manually adjust it to the amount we were off in the 2nd Quarter in one paycheck and the same the following payday to correct for 3rd Quarter. Will that work so that my next 941 Quarterly Report will be back balanced?
I would check with the IRS, but I suspect that you could just deduct the extra and deposit it in August without any penalty. I suspect the employee's deduction and employer contribution amounts would be less than $100 - 150? Thus the 941 coming out of Powerchurch would properly reflect all the deductions, and you don't have to worry about doing a 941-X for the previous quarter.

Again, I'm not an accountant, so I would definitely run that by an accountant or the IRS.
Neil Zampella

Using PC+ since 1999.

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